Investor Day presentation - Investors

Transcription

McKesson Corporation
2016 Investor Day
June 29, 2016
2016 Investor Day Agenda
Craig Mercer – Senior Vice President, Investor Relations
John Hammergren – Chairman and Chief Executive Officer
Pat Blake – Executive Vice President, Group President Technology Solutions
James Beer – Executive Vice President, Chief Financial Officer
Q&A: New Company
Break
Paul Julian – Executive Vice President, Group President Distribution Solutions
Mark Walchirk – President, U.S. Pharmaceutical
Nick Loporcaro – President, McKesson Specialty Health
Stanton McComb – President, McKesson Medical-Surgical
Marc Owen – Chairman, Celesio Management Board
Q&A: McKesson Distribution Solutions
Break
James Beer – Executive Vice President, Chief Financial Officer
Q&A: Wrap-Up
Closing Remarks
2
Forward-Looking Statements
Some of the information in this presentation is not historical in nature and may constitute forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the
use of forward-looking terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,”
“plans,” “estimates,” or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or
intentions may also include forward-looking statements. These forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from those projected, anticipated or implied by such statements. Although it is not possible to
predict or identify all such risks and uncertainties, they may include, but are not limited to, those described in the Company’s annual,
quarterly and current reports (i.e., Form 10-K, Form 10-Q and Form 8-K) as filed or furnished with the Securities and Exchange
Commission (SEC). You are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the
date such statements were first made. To the degree financial information is included in this presentation, it is in summary form only and
must be considered in the context of the full details provided in the Company’s most recent annual, quarterly or current report as filed or
furnished with the SEC. The Company’s SEC reports are available at www.mckesson.com under the “Investors” tab. Except to the extent
required by law, the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
GAAP / Non-GAAP Reconciliation
In an effort to provide additional and useful information regarding the Company’s financial results and other financial information as
determined by generally accepted accounting principles (GAAP), certain materials in this presentation include non-GAAP information.
McKesson also presents its financial results on a constant currency basis. The Company conducts business worldwide in local
currencies, including Euro, British pound and Canadian dollar. As a result, the comparability of the financial results reported in U.S. dollars
can be affected by changes in foreign currency exchange rates. The Company believes the presentation of non-GAAP measures
provides useful supplemental information to investors with regard to its core operating performance as well as comparability of financial
results period-over-period. A reconciliation of the non-GAAP information to GAAP, and other related information is available in the tables
accompanying each period’s earnings press release, materials furnished to the SEC, and posted to www.mckesson.com under the
“Investors” tab.
3
Welcome
John Hammergren
Chairman and
Chief Executive Officer
4
Combination Creates Substantial Shareholder Value
Enhances MTS’ market opportunity, capabilities and scale
Targeting in excess of $150 million of annual synergies with potential to
capture further opportunities
McKesson to receive ~$1.25 billion in cash at close of transaction while
retaining an ~70% equity stake in the jointly-governed company
New focused company with peers in the healthcare technology industry,
as opposed to healthcare distribution services
Strong partner in Blackstone with a shared focus on value creation, including
agreed path to an IPO and tax-efficient exit of McKesson’s investment
5
McKesson’s Executive Committee
Diverse and Experienced Leadership
John H. Hammergren
Chief Executive Officer,
President & Chairman
20 years
Pat Blake
Paul Julian
James Beer
President
EVP & Group President
EVP & Group President
20 years
Chief Financial Officer
3 years
20 years
Kathy McElligott
Bansi Nagji
Jorge Figueredo
Lori Schechter
Chief Information Officer/
Chief Technology Officer
EVP, Corporate Strategy
& Business Development
EVP, Corporate Human Resources
& Administration
EVP, General Counsel &
Chief Compliance Officer
1 year
1 year
8 years
4 years
6
McKesson At A Glance
Delivering Better Health for More Than 180 Years
183
$190B
of serving customers
in revenues
year history
Delivering
More than
13,000
owned and
banner
pharmacies
1/3
of all prescription
medicine in
North America
$3.7B
in operating
cash flow
68,ooo
employees worldwide
>99%
Financial data reported for Fiscal Year ended March 31, 2016; Operational and employee data reflected as of March 31, 2016
Order
accuracy
7
Evolving Healthcare Environment
Generics
Consolidation
Specialty
8
Healthcare Industry – A Great Investment
Changing demographics
Unsustainable healthcare spend
requires innovative approaches,
new demands, improved outcomes
Value-based care
9
Track Record Of Success
Leading
positions
Operational
excellence
Customerfirst
in key markets
commitment is
embraced by all
attitude infuses
entire company
10
Poised For Continued Growth
Right Assets
Scale
Supply Chain
Global Procurement
& Sourcing
Strong Financials
Right Markets
Right Culture
Specialty
Retail Pharmacy
Global Reach
•  Nimble, cost-effective organization
•  Robust cash flow generation
•  Strategic deployment of capital;
balanced investment strategy
11
McKesson Technology Solutions
and Announced New Company
with Change Healthcare
Pat Blake
Executive Vice President,
Group President, Technology Solutions
12
Recent MTS Accomplishments
Expanded Adjusted Operating Profit Margin1
by 612 bps from FY13 to FY16
Generated 11%
of Total McKesson
Adjusted Operating Profit2
Delivered 12%
Adjusted Operating Profit
Growth in FY161
New 5-year,
$139M DoD Contract
Innovative Partnership
with Blue Cross Blue Shield
of Arizona
•  Secure messaging
•  Patient engagement solutions
1 FY16
MTS Adjusted Operating Margin excludes gain on sale of our nurse triage business and is expressed in constant currency, versus FY13 Adjusted Earnings
(Non-GAAP) value.
2 FY16 MTS Adjusted Operating Profit excludes gain on sale of our nurse triage business and is expressed in constant currency; growth figures compared to FY15
Adjusted Earnings (Non-GAAP) value.
13
Evolving Through A Dynamic Market
Operational
Excellence
•  Expanded adjusted operating margin
from 12.6% to 18.7% over last three
years1
•  Operating margin expected to
exceed 20% in FY17
Driving
Innovation
•  Continuing to scale as the nationwide
service provider for the CommonWell
Health Alliance
•  Investing and partnering to bring leading
value-based care technology to market
1 FY16
Expanding Scale and
Customer Solutions
•  Serving over 300 MCOs including 24 of
top 25 health plans; 4K hospitals; 630K
providers; and 50K pharmacies
•  Extending and integrating our solutions
across the portfolio
Investing
for Growth
•  Bookings growth in mid-teens
year-over-year
•  Advancing connectivity, value-based
reimbursement and pharmacy solutions
MTS Adjusted Operating Margin excludes gain on sale of our nurse triage business and is expressed in constant currency, versus FY13 Adjusted Earnings
(Non-GAAP) value.
14
Compelling Strategic Rationale
• 
Creates a new company positioned to address industry’s emerging and most pressing
challenges
• 
Experienced management team comprised of leaders from both McKesson and Change
Healthcare
• 
Significant value for customers by bringing together full suite of end-to-end payment and
claims solutions, as well as robust portfolio of financial, clinical and operational IT products
and services
• 
Creates growth opportunities from cross-selling and combined expertise
• 
Expected to generate in excess of $150 million of synergies by the second year
following the close of the transaction
• 
Unlocks value through singular focus on healthcare technology and technologyenabled services
15
Healthcare Industry Trends Support Strategic
Rationale For Combination
Focus on Efficiency
•  $360 billion spent on
administrative services
•  Up to $270 billion in costs
potentially attributable to waste
and abuse
•  Financial pressure on providers
and managed care organizations
as they balance increasing
patient volumes and complexity
with lower margins
Increasing Complexity
•  Reimbursement and
administration requirements
growing in scope and complexity
•  12% of every healthcare
dollar consumed by
claims submission and
reimbursement
•  Health plans and providers need
more effective solutions to
address value-based care
Shift to Value-Based Care
•  By 2018, 50% of fee-for-service
Medicare payments to be tied to
quality or value through models
such as accountable care
organizations or bundled
payments
•  Shift to managed care for most
medically complex and costly
patients (Medicare, Medicaid)
•  Consumers taking increased
responsibility for financial
implications of care decisions
Avoid waste and streamline
administration
Outsource and automate for
scale and specialization
Leverage content, connectivity and
analytics to support transition
16
Combined Company Will Be Favorably Positioned To
Address Critical And Complex Industry Challenges
Integrated Reimbursement
Management
• 
Comprehensive solutions to support
revenue performance, claims
management and payment accuracy
• 
Empowers payers and providers to
simplify administration and support
financial health
Network-Enabled Value
Reduce Cost &
Complexity
NewCo
Improve
Experience
& Outcomes
• 
Integrated quality/risk analytics, clinical
decision support and value-based payment
capabilities that leverage extensive
connectivity
• 
Enables payers and providers to scale
value-based reimbursement, and
accelerate adoption of models such as
bundled payments
Enable
Value-Based
Care
Consumer/Patient
Engagement
• 
Transparency, member engagement, patient
access, care coordination and payment
solutions are leveraged together to improve
the consumer experience and enhance
outcomes
17
Combination Creates A New Healthcare Technology
Company With Leading Capabilities
McKesson
Technology
Solutions
NewCo
OVERVIEW
Focused on improving patient safety, reducing cost and
variability of care, and better managing revenue streams
Leading provider of software and analytics, network
solutions and technology-enabled services
COMPANY
Contributes four businesses:
•  McKesson Health Solutions (MHS)
•  Connected Care and Analytics (CCA), excluding
RelayHealth Pharmacy (RHP)
•  Imaging and Workflow Solutions (IWS)
•  Business Performance Services (BPS)
•  Contributes substantially all of its businesses,
except for pharmacy switch and prescription routing
business
EMPLOYEES
MHS, CCA, IWS and BPS: ~10,000 people
~7,000 people, of which ~2,000 are seasonal
LOCATIONS
Multiple locations including: Alpharetta, GA; Newton, MA;
Vancouver, Canada
Multiple locations including: Nashville, TN; Atlanta, GA;
San Francisco, CA
18
Breadth Of Complementary Capabilities Creates
Opportunity To Deliver Significant Value To Customers
McKesson
Technology
Solutions
NewCo
Providers
Payers
Consumers
Capabilities to verify patient eligibility,
deliver clinically appropriate care,
submit claims and manage payments
across the revenue cycle
Comprehensive solutions to address
member engagement, payment
accuracy, network management and
the transition to value-based payments
Digital tools to access personal health
information, engage with providers,
and make smart choices about quality,
cost and convenience
•  Patient Access Suite and Services
•  Medicare and Medicaid Engagement
•  Cost and Quality Transparency
•  Clinical Information Exchange
•  Payment Integrity Solutions
•  Cost and Quality Analytics
•  Clinical Claims Management
•  Consumer Education and Health &
Wellness Alerts
•  Imaging Workflow and Intelligence
•  Claims, Eligibility and Electronic
Remittance Advice Network
•  InterQual Clinical Decision Support
•  Claims, Denials and Payments
Management
•  Revenue Cycle Outsourcing
•  Provider Network Management
•  Patient Portal
•  Financial Responsibility Estimation
•  Online/Mobile Payment
•  Communication and Payment Services
•  Value-Based Care Analytics
19
New Company Summary
James Beer
20
Transaction Summary
Transaction Structure
•  McKesson contributes all MTS businesses, except for RHP and EIS
businesses. Businesses contributed: MHS, CCA (excluding RHP), BPS,
IWS
•  Change Healthcare contributes all businesses, except for its pharmacy
switch and prescription routing business
•  Pro forma combined revenue of approximately $3.4 billion (FYE 3/31/16)
•  Expect synergies in excess of $150 million by the second year following
the close of the transaction
Financials
Ownership
•  Received commitments for $6.1 billion of funded debt, with proceeds to be
used to repay ~$2.7 billion of existing Change Healthcare debt, ~$1.25
billion in cash payments to McKesson, ~$1.75 billion in cash payments to
Change Healthcare, and the remainder to be used for transaction-related
expenses
•  McKesson: ~70%
•  Change Healthcare: ~30%
21
Transaction Summary (continued)
Management and
Governance
•  Governance will be shared jointly between McKesson and Change
Healthcare
•  CEO: Neil de Crescenzo, Change Healthcare’s current CEO
•  Chairman of the Board: John H. Hammergren, Chairman and CEO of
McKesson
•  Board of directors (10): CEO; appointees from McKesson (3); appointees
from Change Healthcare (3); independent directors (3; one McKesson
nominated, one Change Healthcare nominated, one joint McKesson/
Change Healthcare nominated)
•  Experienced management team comprised of leaders from both
McKesson and Change Healthcare
Timing
•  Transaction expected to close in first half of calendar 2017
•  McKesson and Change Healthcare to take steps to launch an initial
public offering in the months following the close of the transaction, subject
to market conditions
•  McKesson plans to subsequently exit its investment in a tax-efficient
manner
Closing
•  Subject to closing conditions, including antitrust clearance and
completion of audited financial statements of the MTS businesses being
contributed to the new company
22
New Company Q&A
23
McKesson Distribution
Solutions
Paul Julian
Executive Vice President
Group President Distribution Solutions
25
Distribution Solutions: Core Operations
North America
Pharmaceutical
Distribution and
Services
Pharmaceutical
distribution,
technology and
services in the U.S.
and Canada
Medical-Surgical
Distribution and
Services
Medical surgical
supplies distribution
and services
in the U.S.
International
Pharmaceutical
Distribution and
Services
Celesio
pharmaceutical
distribution
and retail
operations
Global
Procurement
and Sourcing
Enterprise-wide
sourcing
organization
$188B in revenues and $4.5B in adjusted
operating profit1 in FY16
1
Reflects non-GAAP information calculated on an Adjusted Earnings basis, excluding Cost Alignment Plan charges recognized in Q4 FY16 and the gain on the sale
of ZEE Medical in Q2 FY16, and is expressed in constant currency.
26
Distribution Solutions Leadership Team
Paul C. Julian
EVP, Group President
Distribution Solutions
20 years
Marc Owen
Stanton McComb
President
McKesson Medical-Surgical
President
McKesson U.S. Pharmaceutical
14 years
13 years
15 years
Chairman
Celesio Management Board
Alain Champagne
Nick Loporcaro
President
McKesson Canada
President
McKesson Specialty Health
6 years
13 years
Mark Walchirk
Emilie Ray
Jack Fragie
16 years
34 years
President
McKesson Pharmacy
Technology & Services
President
Global Procurement
and Sourcing
27
FY16 Milestones
Strong Execution Across Distribution Solutions
Deepened
Customer
Relationships
Albertsons
and
AHOLD
PSS Integration
Completed
Exceeded
Business Case
Gesundleben Banner from German
Subsidiary GEHE Wins:
Significant
Growth in
North
America
Specialty
Businesses
Best Banner
Format in 20161
Announced
>$4 billion
in Strategic
Acquisitions
1 Sempora
Coop Study 2016
Added
Executing on
Global
Procurement
Synergies
Expanded Health
Mart from
3,865
to
4,610
stores
~200
Canadian Banner Pharmacies
28
FY16 Achievements Across
North America
International
•  Continued to expand our base in independent retail
and health systems in the U.S.
•  Business exceeded expectations in FY16 on a constant
currency basis
•  21% year-over-year growth in OneStop
•  Industry position maintained or strengthened in major
countries
•  #2 generics purchaser in Canada
•  Leading position in community oncology
•  Medical-Surgical year-over-year growth driven by
surgery centers, lab, physician office and home care
•  Divested non-core ZEE Medical business
•  Began process of combining pharmacy technology
businesses under new business unit (Pharmacy
Technology & Services)
•  Pharmacy Technology & Services achieved a 5%
Customer Net Promoter score improvement year-overyear
•  Announced ~$1.0B in acquisitions across Europe in
retail and wholesale
Global Procurement & Sourcing
•  Exceeded Year 1 synergy expectations
•  Launched innovative platform to build global data
analytics capabilities
•  Continued private label leadership with expertise
spanning more than 10 years
•  Announced >$3.5B in acquisitions led by Rexall,
Biologics and Vantage Oncology (closed Biologics and
Vantage Oncology effective 4/1/16)
29
Driving Operational Excellence Across
~9%
99.98%
Increase
Order Accuracy
in Lines Processed
Across U.S.
Pharmaceutical
Across North America
Distribution and Services
~50K
Orders Processed Daily
~7%
Increase
>2.3M
in Lines for Medical
and Surgical
Supplies Shipped
Across North America
Distribution and Services
Lines Per Day
$220M+
in Six Sigma-Related
Savings Across
North America
International
Distribution and
Services
>1%
Increase in
Automation Rate
99.92%
Inventory Accuracy
30
Driving Business Growth In Global Markets
Market Overview1
•  Global pharmaceutical market will grow
approximately 6% CAGR 2015-2020
Global
•  Growing population of elderly and
chronically ill
•  Innovative therapies to fight disease states
North
America
•  Pharmaceutical spend expected to grow
•  More than one-third of growth will be in
specialty in the U.S. from 2015-2020
•  First biosimilar launched in the U.S. and
four launched in Canada
Overall North American Market
Sales (USD Billion)
% Change
700
14
600
12
10
500
8
400
6
300
4
200
2
100
IMS Institute for Healthcare Informatics Global Use of Medicines Report 2015-2020 (April 2016). IMS Institute for Healthcare Informatics Use of Medicines Report US 2015-2020
(April 2016). IMS Health Market Prognosis Summary Q1 2016 - North America.
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent the accuracy of IMS data or
McKesson’s interpretations of IMS Health data. Any subsequent use or interpretation of this data will be the liability of the receiving party and not of McKesson or IMS Health.
2020
2019
2018
2017
2016
2015
2014
2013
2012
•  Specialty will grow to represent nearly 50%
of total spend by 2020
0
2011
Europe
•  Pharmaceutical spend expected to grow
0
-2
1
31
Global Distribution Footprint
North America
Europe
•  Best-in-class distribution network for
pharmaceuticals and medical-surgical supplies
•  Ongoing investments in established distribution
network
•  Supply pharmacies and hospitals across
Western Europe
•  Continued investment in distribution centers
and automation
32
Showcasing Innovation And Expansion In Retail
A Global Footprint
13,000+ owned and banner pharmacies globally
•  United States: More than 4,600
Health Mart stores
Expanding Services
•  Payer access and programs for
independent pharmacies
•  Patient adherence and claims management
•  Canada: More than 2,100 banner stores
•  Automated pharmacy solution stats
•  Europe: More than 6,500 owned, managed
and banner pharmacies
•  Reimbursement optimization
Market data as of March 31, 2016
•  European Pharmacy Network (EPN)
33
Spotlight: Rexall Health To Expand Pharmacy
Solutions In Canada
•  New channel, new view of innovative pharmacy care
•  Strong talent pool and expanding knowledge to strengthen
capabilities and service across segments
•  Independent customers remain confident in McKesson’s
commitment and value proposition
•  Broader reach through expanded footprint in
growing geographies
•  Enhanced generic sourcing opportunities to benefit
diverse customers
•  Innovative pharmacy programs benefit full range
of pharmacy models and patients
Note: Rexall Health acquisition has not yet closed and is subject to regulatory approval.
34
Expand Independent Banners Presence
Unique Integrated Service Offering Helps Drive Above-market
Banner Growth
Increased National
Footprint
Grew Store Count
~200
Servicing
Our Distinctive Competitive Advantage:
Better Business Health for Independent Pharmacies
+
Expanding
Professional
Services
+
Enhancing
Shared
Services
+
Leveraging
Global
Collaboration
Increasing Private
Label Sales
4% increase in SKUs
>2,100
Independent
Pharmacies
35
Global Procurement And Sourcing
McKesson Global Procurement & Sourcing
• 
• 
Enterprise-wide sourcing and procurement
responsibility overseen by experienced
leaders
Excellent progress with manufacturer
discussions in FY16
• 
Several key agreements closed and worldwide
partnerships established
• 
Expect synergies of $275-$325 million by end
of FY17, more than one year ahead of original
business case
36
Spotlight: McKesson And Walmart Sourcing
Agreement
McKesson and Walmart
to jointly source generic pharmaceuticals, driving efficiencies and
adding scale and value for both companies
Expanded distribution
agreement
Natural next step for
two companies with more
than 20-year history of
working together
Co-sourcing partnership
will be made operational
Place
Text Here
in late FY17
Potential to expand
relationship in the future
37
Global Private Label Offerings
Strategic Value And Expertise Provides Opportunities
Across the Portfolio
OTC
Increase private label OTC penetration
in new and existing geographies
and categories
Medical
Supplies
Advance opportunities in global medicalsurgical supplies based on U.S. scale
Generics
Manage opportunities in U.S. and
Canada and consider longer-term
opportunities in Europe
38
Driving Innovation And Partnering With
Manufacturers
Delivering Value
>100K
Customer Locations
Spanning Market Channels
Proprietary Generics
and Private Label
Programs
High
HighEfficiency
Efficiency
Best-in-class network;
Best-in-class network; organized
organized for quality,
for quality, efficiency and speed
efficiency and speed
Data and
Analytics
Services
Supporting
Pharmaceutical
Development
Life Cycle
• 
• 
Product commercialization
Consulting and data analytics
• 
Clinical research capabilities
• 
Patient access and support
• 
Risk evaluation mitigation
• 
Optimized pharmacy replenishment
• 
Supply chain economics and safety
• 
Forecasting and data visibility
39
Leading The Transformation To Value-Based
Reimbursement (VBR)
15 new VBR agreements in FY16
Market leading tools and capabilities
that position us as best-in-class
Proven results and thought leadership
40
U.S. Specialty Market Grew 15% In 2015
Continued Growth Expected Through 20201
U.S. and Europe
Pharmaceutical Markets
Specialty
Demographics
and Increase
in Chronic
Diseases
Focus on data
and analytics
Innovative
Products
coming to market,
with largest share
coming from
oncology
Spending on
Specialty
Medicines
Doubled
in the past five years and is
expected to continue growing
2015
2020
IMS Institute for Healthcare Informatics Global Use of Medicines Report 2015-2020 (April 2016). IMS Institute for Healthcare Informatics Use of Medicines Report
US 2015-2020 (April 2016).
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent the accuracy of IMS
data or McKesson’s interpretations of IMS Health data. Any subsequent use or interpretation of this data will be the liability of the receiving party and not of McKesson
or IMS Health.
1
41
Market Dynamics And Investments Driving
McKesson’s North American Specialty Growth
Strategic Focus in Specialty
Distribution
Multiple distribution channels:
open market; limited; exclusive
Differentiated Physician Offerings
US Oncology Network
Vantage Oncology
Comprehensive Portfolio of Offerings
Leader in Community Oncology
Services throughout the
Oncology Continuum of Care
Manufacturer Services
Services span a drug’s life cycle
Biologics
Well Positioned for Continued Growth
42
Delivering Better Health
Operational
Excellence
•  Executing on cost alignment plan
and business process initiatives
•  Partnering with manufacturers to
deliver value and to drive
procurement synergies
•  Integrating acquisitions
Driving
Innovation
•  Leading drug delivery channels
and manufacturer programs
•  Optimizing supply chain through
the use of automation
•  Innovating in oncology research
Expanding Scale and
Customer Solutions
•  Expanding retail pharmacy footprint
and services
•  Enhancing capabilities to support
specialty commercialization
and growth
•  Broadening private label solutions
Investing
for Growth
•  Deploying capital globally
•  Growing retail pharmacy footprint
and solutions
•  Implementing and optimizing efficiency
projects globally
43
U.S. Pharmaceutical
Mark Walchirk
President
U.S. Pharmaceutical
U.S. Pharmaceutical
Committed to Delivering Better Health
Operational Excellence
Expanding Scale and
Customer Solutions
Driving Innovation
Investing for Growth
45
Industry Landscape
Healthcare Continues to be a Dynamic and Growing Industry
10,000
New Medicare Beneficiaries
Enrolled Every Day1
Generic Launches
$87 Billion
4.4 Billion
Prescriptions Dispensed in 20152
6.7% 2016 to 2020
Brand CAGR
4
of brand sales at risk from 2016 to 20203
9.3% 2016 to 2020
Generic CAGR
4
Congressional Budget Office, March 2015
IMS Health Medicines Use and Spending in the U.S.: A Review of 2015 and Outlook to 2020, April 2016
3 IMS Health National Sales Perspectives. December 2015; sales in year prior to expiry for 2010-2015; MAT Sept 2015 sales shown for 2016-2020
4 IMS Health Market Prognosis USA for the period of 2016-2020, March 2016
Note: IMS expressly reserves all rights, including rights of further copying, distribution and republication. McKesson does not warrant or represent the accuracy of IMS
data or McKesson’s interpretations of IMS Health data. Any subsequent use or interpretation of this data will be the liability of the receiving party and not of McKesson
or IMS Health.
1
2
46
Leading Portfolio Of Services And Products
Strong Core Business with a Broad Value Proposition
National Retail
Pharmacy
Health Systems
Independent & Small
Chain Pharmacy
•  Efficient and flexible
distribution network
•  Proprietary generics and
private label programs
•  Health Mart
•  Inventory management
solutions
solutions
•  340B program
management
•  Clinical services
•  Clinical / Operational
consulting
•  Pharmacy technology
•  Central fill / High volume
solutions
•  Managed care
contracting
•  Clinical services
solutions
•  Packaging
47
Driving Value For National Retail Pharmacies
Recent Partnerships Continue to Prove the Value of Our Model
Selectively
Target
New Growth
Renew and
Retain Key
Customers
Expanding
Customer
Relationships
Quality and
Service that
Exceed Customer
Expectations
Customized
Solutions to Meet
Customer Needs
Differentiated
Value-added
Services
48
Broad Offerings For Health Systems
Delivering Customizable, Scalable Solutions to Our Customers
Federal
Department of Veterans Affairs
Department of Defense
Health Systems
Solutions-Led Approach
•  Data and technology solutions
•  Supply chain and inventory
management expertise
Strategic partnerships with
the nation’s leading health
systems and alliances
•  Pharmacy consulting services
Alternate site
•  Specialty consulting
Tailored capabilities
for long-term care and
specialty pharmacies
•  Cost containment and revenue
enhancement services
•  340B support / Macro Helix
49
Leveling The Playing Field For Independents
Health Mart is the Largest Network of Independent
Pharmacies in the U.S.
Focused Strategy
Health Mart Store Count
4,610
Access to preferred networks
3,865
3,096 3,281
Drive patients into store
Expand store revenue
FY13 FY14 FY15 FY16
50
Strategic Partner To Manufacturers
Enabling High-Quality, Reliable Business Operations
Growth
Serve a large and
growing customer
base of pharmacies,
hospitals and clinics
Service
Deliver industryleading supply chain
excellence and
business insights
Broad
Channel
Access
Drive increased
penetration through
generic programs
and launch
capabilities
ValueAdded
Services
Provide solutions
and capabilities that
meet customers’
evolving needs
51
Our Generics Programs Continue To
Drive Value
OneStop
Proprietary Generics Program
Expert Product Sourcing and
Deep Relationships with
100+
Strong
Compliance
and Growth
Manufacturers
Competitive
Pricing,
Choice and
Industry-Leading
Service Levels
>10 Years
of Leadership
in NorthStar
Private Label
+21%
OneStop
Growth
in FY16
52
Continue To Make Investments In Our
Established Distribution Network
Technology
NRDC Model
Increases automation
and productivity
National Re-Distribution
Center operational
since FY13
Ongoing Investment
Maintaining state-of-the-art
distribution network
Investments Drive Operational Excellence
53
Our People
United Around Our Commitment to Better Health
54
Positioned For Continued Success
Operational
Excellence
•  Industry-leading service levels
•  Efficient, high-accuracy financial
transaction processing
•  Our people, infrastructure and
investments drive operational
excellence
Driving
Innovation
•  Industry-recognized and
award-winning workflow, inventory
and 340B customer technology solutions
•  Innovative, internally-developed, fit-for-purpose
business technology
•  Provide unique services, technology and capabilities
to customers
Expanding Scale and
Customer Solutions
•  Expanded Health Mart franchise, services
and solutions
•  Solutions-led approach combining
distribution with unique service
capabilities
•  Enhanced offerings to drive value
for customers and manufacturer
partners
Investing
for Growth
•  Productivity gains through technology
and automation investments
•  State-of-the art distribution network with
ongoing capital investment
•  Consistent investment in our business for
continued growth
55
Nick Loporcaro
President
Uniquely Servicing Stakeholder Needs
Expanding Scale and
Customer Solutions
Driving Innovation
57
U.S. Specialty Health Market
Poised for Continued Growth
Specialty Driving More Than 1/3
of All New Growth Through 20201
U.S. Specialty Pharmaceutical
Market Spend 20151
Other
Specialty
Oncology
19%
All
Others
Oncology
26%
25%
12%
23%
Infectious Disease
Multiple
Sclerosis
•  Rapid growth across
specialties, including oncology
•  Channel growth in both
specialty pharmacy and
specialty distribution
•  Increasing drug development
in similar therapeutic classes
51%
20%
AutoImmune
Late Stage R&D Pipeline
Compounds* by Top Therapy Areas1
Evolving Needs of
Providers, Payers and
Manufacturers
15%
5%
4%
Neurology
Dermatology
Vaccines
•  Increased emphasis on
quality, cost containment and
value-based care
* New Active Substances (Filed, Phase 3, Phase 2)
1 IMS
Health National Sales Perspectives Jan 2016 and Medicines Use and Spending in the U.S. (April 2016)
58
Thriving in an Increasingly Complex Market
Mid-teen Year-over-Year
Revenue Growth in FY16
More Than 750K
Prescriptions
Dispensed
Nationwide
Clinical
Research
•  >3,400 Oncologists
Nearly 1,500
Phase 1 to Phase 4
Clinical Trials to Date
•  >5,000 Other
Specialists
iKnowMedSM
+
McKesson Specialty Health data as of March 31,2016
Expanding
Footprint Across
Specialties
Ranked #1
Oncology
EHR
>1,600 Users
>650
Payer
Relationships
59
Award-Winning Operational Excellence
Delivering Exceptional Service Every Day
Distribution Operations1
•  >22,000 lines processed per day
Reimbursement, Access,
and Co-Pay Programs
•  Certified by Benchmark Portal as
a Center of Excellence
•  >6,400 shipments processed
per day
•  Ranked Top 10 Call Center of
35,000 in North America
•  99.96% order accuracy
•  99.99% inventory accuracy
•  Processes >25M claims annually
with a 99.99% accuracy rate1
•  >80M vaccine doses delivered
to >40K providers annually in
support of the CDC’s Vaccines
for Children program
1 McKesson
Specialty Health data as of March 31, 2016
60
Manufacturer Solutions
Supporting Manufacturers Across Product Life Cycle
Connecting
Manufacturers
to Stakeholders
Clinical
Development
Pre-Launch /
Launch
Growth
Maturity
1
2
Patient
3
1
•  Clinical Trial Research / Site Management •  Clinical Trial Logistics
Manufacturer
Payer
Provider
2
3
•  Prescriber and Pharmacy Outreach
and Education
•  Patient Adherence and Clinical
Management Services
•  Reimbursement, Access and Patient
Assistance Programs (PAP)
•  Patient Co-Pay Programs
•  Drug Safety - REMS Program Design
and Operations
•  Health Economics and Outcomes Research
•  Specialty Distribution
•  Specialty Pharmacy
•  Outsourced Logistics / 3PL
•  Market Analytics and Insights
61
Immuno-Oncology
Advancing the Fourth Pillar in Cancer Therapy
Clinical Development
Clinical Education
Clinical Management
•  >30 immuno-oncology trials
to-date
•  >50 initiatives reaching
>1,600 practice personnel
•  Provided tailored clinical
management services
•  Nearly 500 patients enrolled
to-date
•  >40 live speaker programs
and regional symposia
•  >8,700 patients on immunooncology therapy
Market Access and
Patient Assistance
Services
Supply Chain
Market Analytics
•  Multi-channel presence
•  Real-time market analytics to
assess and support product
uptake
•  Program to-date has
supported >7,000 cases
•  Group purchasing organization
(GPO) contracting
•  Cold-chain shipping
McKesson Specialty Health data estimated as of March 31, 2016
62
Biosimilars
Strong Position and Early Experience Driving Success
Early Success
• 
• 
• 
• 
Pivotal Clinical Trials
>$35B
Key Opinion Leaders
Robust Provider Education Campaign
Patient Assistance Program (PAP)
Administration
Zarxio
®
Significant adoption
in Onmark and
Unity GPO-affiliated
practices as
compared to industry
in annual originator
sales exposed
to biosimilar
competition by 20201
Market uptake will depend on regulatory,
legal and commercial factors
Largest
Physician
Networks
Strong
Manufacturer
Partnerships
End-to-end Established
Patient
Payer
Support Relationships
Services
Positioned for Future Growth
1 IMS
Health Delivering on the Potential of Biosimilar Medicines (March 2016)
63
End-To-End Oncology Solutions
Integrating Care at the Community Level
Expanding the
Oncology Ecosystem
OncologyRx
Care Advantage
In-Office Dispensing
Network
64
Payer Partnerships And Solutions
Leading the Charge to Value-based Care
Value-based Care Solutions Leveraged by Our Practices
Value PathwaysTM Powered
by NCCN1
Clear Value PlusSM
CareLyticsTM
Cost-effective clinical
pathways with
network-wide adoption
Clinical decision support
tool enabling
pathways adherence
Practice and population
management technology
platform
Innovent Oncology
My Choices, My Wishes®
Care management and
patient support across
different sites of care
Advance care planning
program honoring patients’
end-of-life wishes
Proprietary Suite of Solutions Positioning Practices to
Grow Value-based Care Partnerships with Payers
1
NCCN - National Comprehensive Cancer Network
65
Deep Expertise Across Specialty Portfolio
Operational
Excellence
•  Leveraging new technologies to
further optimize distribution and
patient support services
•  Transforming care delivery to
achieve optimal outcomes
Driving
Innovation
•  Leveraging our highly unique
physician network model to drive
collaboration and evolution in the
community setting
Expanding Scale and
Customer Solutions
•  Aligning our organization to key
stakeholder needs
•  Further expanding on the full suite
of solutions that we offer providers,
payers and manufacturers
Investing
for Growth
•  Forming strategic partnerships
•  Making smart acquisitions to
advance our strategy
•  Pioneering new tools, agreements,
and care delivery models in a valuebased world
66
Stanton McComb
President
Driving Value for Customers
Expanding Scale and
Customer Solutions
Driving Innovation
68
Driving Business Growth In A Dynamic Market
Shift to lower cost,
non-acute care settings
Consumerism2
•  74% of consumers
with $3K+ deductible
solicit pricing
information
•  6 of top 10 attributes
for primary care clinics
focus on convenience
for consumers
Large and growing
non-acute market1
Home Care Products
5.5%
market growth5
>$20B
Retail clinics to
grow 23%
through 20193
Market Intelligence, 2014; IMS Health Data, 2014
Board 2016 Trends, March 2015
3 2015 HIDA Horizon Report, “Primary Care Evolution: Care Settings Shift To Meet Consumer Demands”
4 Advisory Board “Six most important trends to watch in 2016”, February 2016
5 U.S. Market for Home Care Products 2014-19 Growth Rate, HIDA 2015 Extended Care Market Report
By 2018, 50% of
Medicare payments tied
to risk and 90% of feefor-service tied to quality4
1 GHX
2 Advisory
69
Leader Across Alternate Site Markets
Physician Office
Emergency Room
Home Health
Agencies
Rehabilitation
Facilities
Hospice
Long-Term Care
Durable Medical
Equipment
Ambulatory
Surgery Centers
Lab Testing
Urgent Care
Market Leader for the Ambulatory and Post-Acute Care Continuum
70
Excellence In Operations
Leading Supply Chain Capabilities Drive Customer Satisfaction
Leadership across
the value chain
McKesson Delivery Model
Quality in Operations
Patient Home Delivery
Defect rate continues to improve to
best-in-class levels
16% reduction
in DPMO1
FY15
1 DPMO
= Defects per million orders
FY16
•  52% more private fleet customers
•  Optimized over 38 million miles
More than 14 million direct-to-consumer
shipments
Customer Satisfaction
4 consecutive quarters of rising
Net Promoter Scores
71
Expanding Scale And Customer Solutions
Integration has Established Scalable Platform and Offering
Integration Complete
Exceeded PSS business case
McKesson Brand
Broad, cost-effective offering
including Generics, OTC and Lab
Manufacturer
Partnerships
Strong growth for preferred suppliers
Leading Sales Channel
1,500+ tenured sales reps
"McKesson is a strategic partner that takes manufacturer and distributor
relationships to another level. Their expertise in the non-acute market is unrivaled."
– Top Global Medical-Surgical Manufacturer
“The depth of knowledge and experience McKesson brings to my system is
unmatched in the industry.” – Large Medical Group in Mid-Atlantic
72
Innovation Through Digital Sales And Marketing
Three Keys to Success
1 U.S.
2 DME
Digital
Marketing
~250% growth in sales from
email campaigns; key metrics
exceed industry benchmarks1
Merchandising
Online tools promoting McKesson
Brand and our preferred vendors
E-Commerce
Tailored e-commerce solutions for
online retailers and DME2 providers
with next-day patient home delivery
unique open rate, click-through rate metrics from IBM Silverpop 2015 Marketing Metrics Benchmarks Study
= Durable Medical Equipment
73
Investing To Drive Growth In Priority Segments
Laboratory
•  Lab tests guide more than 70%
of medical decisions1
•  Shift in testing from central lab
to point-of-care
•  Increasing physician employment
•  Coordinating care across continuum
•  Developing supplier portfolio
•  Developing medical-surgical, Rx and
lab formulary
•  Leveraging sales support model
with lab specialists
•  Enhancing lab-specific
service model
1
Health Systems
“The Value of Clinical Laboratory Services” American Clinical Laboratory Association, 2014
•  Investing in health systems
sales force
•  Delivering analytics to
understand costs
74
Extending Capabilities In Medical-Surgical
Operational
Excellence
•  Use automation to further optimize
supply chain
•  Reduce cost-to-serve
Driving
Innovation
•  Expand digital capabilities for retailer
partners
•  Enhance online sales channels
Expanding Scale and
Customer Solutions
•  Leverage scalable platform and channel
for preferred suppliers
•  Grow private label offering
Investing
for Growth
•  Extend lab capabilities into
new markets
•  Enable seamless, transparent supply
chain for health systems
75
Celesio
Marc Owen
Chairman
Celesio Core Operations
Highlights
•  Extensive network across
13 countries in Europe
•  Leader in pharmaceutical
distribution
•  Strong retail presence
with more than 6,500
owned, managed and
banner pharmacies
•  Relatively fragmented
industries
•  Population of nearly
350 million in the markets
we serve1
1 U.S.
Census Bureau International Database (2015)
Note: Celesio completed the sale of its Brazilian operations on May 31, 2016.
77
Celesio Senior Management
Marc Owen
Chairman
14 years
Chief Legal / Compliance Officer
Tilo Köster
Chief Operating Officer
Brian Tyler
Alain Vachon
24 years
19 years
27 years
78
Celesio
Broad Value Proposition across Europe
Expanding Scale and
Customer Solutions
Driving Innovation
79
European Pharmaceutical Industry Landscape
Overall European Market
Sales (USD Billion)
250
200
Stable, Growing Market
150
Increasing Generics Penetration
100
Source: IMS Health Market Prognosis Summary Europe 2016-2020, March 2016
2020
2019
2018
2017
2016
2015
2014
2013
2012
0
2011
50
Demographics, Chronic Disease
and New Therapies
80
Operational Excellence Driving Business
Improvement
Operational
Excellence
•  Inventory accuracy
99.92%
•  >1% increase in
automation rate
•  NRDC model
introduced in France
•  Targeting >3%
improvement in
supply chain cost
per unit
•  Six Sigma projects
ongoing and new
projects initiated
81
Global Procurement And Sourcing
Continue to Coordinate with London Office to Drive Efficiencies
82
Investment In IT Platform Driving Future
Operational Success
Country-Level
Data
Customers
Multi-year investment
in ERP implementation
will align systems with
McKesson and help
drive global procurement
and distribution efficiencies
Market
Data
Suppliers
83
Broad Retail Footprint Across Europe
IRELAND
NORWAY
UNITED KINGDOM
SWEDEN
BELGIUM
FRANCE
GERMANY
Note: Brocacef is a joint venture where Celesio has an equity interest of 45%.
NETHERLANDS
ITALY
84
European Pharmacy Network
Strong Network of Owned, Franchise and Co-Op Pharmacies
Owned Pharmacies
•  Consistent European brand
•  A differentiated pharmacy
concept
Franchise Partner
•  Common store appearance
•  New technology and
product focus helps drive
store traffic
Cooperations and
Independents
•  Lloyds’ concept elements
customized for pharmacies
•  Focusing on specialty
services and product
categories
Customer-Centric Approach Across All Offerings
85
EPN: Expertise And Services Drive Success
Performance of Converted Pharmacies Validates Concept
Expert
Knowledge
Category
Management
Marketing
Services
Management
Services
Global
Sourcing and
Procurement
86
Investing In Innovation
Online
Doctor
Hospital
Solutions
Prescription
Assembly
Innovation driving
connected care for
patients in Sweden
and the UK
Unique value proposition
to hospitals and
manufacturers to further
penetrate hospital
market
Automated assembly
system (integrated to a
wholesale branch) to
assemble individual
patient prescriptions in
mass in the UK
Patient
Support
Services
Tailored patient support
programs in Norwegian
Vitusapotek pharmacies
Homecare
Solutions
M&A investment in UK
to complement existing
homecare solutions with
more advanced services
87
M&A Activity Is A Future Growth Driver
Announced Acquisitions
Potential Opportunities
•  Further Consolidation
group
•  Channel Expansion
•  Geographic Expansion
Note: Belmedis, Bupa Home Healthcare and Sainsbury’s acquisitions have not yet closed and are subject to regulatory approvals.
88
Strong Platform For Growth
Operational
Excellence
•  Driving forward existing projects and
initiating Six Sigma pilots
•  Focus on distribution network
optimization, including increasing
automation and introducing new
models
Driving
Innovation
•  Expanding dispensing services in the
United Kingdom
•  Continue to create manufacturer
programs in order to expand offerings
across supply chain
•  Driving online doctor programs to allow
Expanding Scale and
Customer Solutions
and services across Europe with EPN
initiative
specialty commercialization and
growth
•  Growing private label solutions
Investing
for Growth
•  Further consolidation
opportunities in key
Western European markets
•  Investing in new channels to increase
value proposition (Specialty,
Homecare, Long Term Care)
connectivity in patient care
89
McKesson Distribution Solutions Q&A
90
Financial Update
James Beer
Agenda
Drivers Of Value Creation
Segment Financial Reviews
–  Distribution Solutions
–  Technology Solutions
Operating Cash Flow
Capital Deployment Priorities
FY17 Outlook
93
McKesson Drives Sustained Value Creation
Attractive Healthcare
Market
Public policy agenda supports
greater access and improved
efficiency
Favorable demographics in North
America and Europe
Experienced
and Tenured
Management Team
Long track record of delivering results
Operational excellence
Financial discipline
Well-positioned
Businesses
Market-leading positions
Global footprint and sourcing scale
Retail pharmacy networks
Specialty distribution and services
Portfolio Approach
to Capital
Deployment
Internal investments
Strategic M&A
Share repurchases
Dividends
94
Scaled and Diversified Portfolio
with Multiple Profit Levers
95
Distribution Solutions: FY16 Performance
9% Year-over-Year Constant
Currency Revenue Growth
• 
Expanded Retail Pharmacy
Footprint to >13K Stores
• 
Deepened Customer
Relationships
• 
Significantly Grew
North America
Specialty Businesses
$4B+
Announced
in Strategic
Acquisitions
21%
Growth in
OneStop in FY16
Contributed
Significantly
to Operating Cash
Flow Expansion
Note: Rexall Health and Sainsbury’s acquisitions have not yet closed and are subject to regulatory approval.
Ahead of Schedule on
Procurement-Related
Synergies from
Celesio Acquisition
96
Distribution Solutions: FY17 Revenue Outlook
Distribution
Solutions
Revenue growth
expected to increase
by high-single digits
driven by
market growth and
acquisitions
North America
Pharmaceutical
Distribution and
Services
Medical-Surgical
Distribution and
Services
Expect to deliver
high-single digit
revenue growth
Expected to deliver
mid-single digit
revenue growth
International
Pharmaceutical
Distribution and
Services
Revenues are
anticipated to grow
low-double digits
on a constant
currency basis
97
Distribution Solutions: FY17 Financial Drivers
Global Sourcing Expertise and
Innovative Sourcing Programs
Scaled
Leadership
Positions
Across Diversified
Portfolio of
Businesses
Operational
Excellence and
Innovation
Focus on
Higher-Growth
Businesses
Acquisition
Accretion and
Synergies
Steady Margins
Expected Despite Generic
Pricing and Customer
Consolidation Headwinds
Demonstrated Track
Record of Success
A focus on long-term operating profit expansion
98
Technology Solutions
Diversified Portfolio with Improved
Margin and Recurring Profit Streams
99
Technology Solutions: FY16 Performance
288 Basis Point Expansion
in Adjusted Operating Margin1 Despite EHR Challenges
Sources of Operating Profit
Steady Revenue
Growth
Across Non-EHR
Businesses2
~80% of FY16
Operating Profit
from Well-positioned
Payer, Connectivity
and Imaging
Businesses
Healthy Operating
Primarily Transaction
and Subscription-based
Operating Profit
Support Shift to
Value-based Care
Cash Flow
Expansion
1 FY16
TS Adjusted Operating Margin, excluding the Cost Alignment Plan and the gain on sale of nurse triage and expressed in constant currency versus FY15
Adjusted Earnings (Non-GAAP) value.
2 Excludes Enterprise Information Solutions and adjusted to excluded divested businesses.
100
Technology Solutions: FY17 Financial Drivers
Executing Against Newly
Optimized Portfolio
Focus on Higher-growth Areas and
Driving Long-term Margin Expansion
FY17 Revenue
Down Slightly
Due to EHR
Platform
Scaled Leadership Positions
to Meet Market Needs
Payer, Relay Pharmacy, Imaging
and Revenue Cycle Management
Solutions are Positioned to
Drive Steady Long-term
Growth
FY17 Adjusted Operating
Margin Goal of
“Low 20% Range”
101
Annual Operating Cash Flows And Net Income
Expanded Over Time
($ Billions)
$4.0
$3.5
$3.0
Operating Cash Flow
Operating Cash Flow
Net Income
1
Adjusted Net Income
FY15 – FY16
18%
$2.5
$2.0
FY16 – FY172
$1.5
15%
$1.0
1 Reflects
Adjusted Net Income information calculated on an Adjusted Earnings (Non-GAAP) basis as reported (and recast) for the fiscal years 2010 to 2015. FY 2016
Adjusted Net Income excludes the Cost Alignment Plan and gains on sale of the two businesses and is expressed in constant currency.
2 Projected growth excludes cash payments related to the Cost Alignment Plan and a settlement agreement with the U.S. Drug Enforcement Administration and the U.S.
Department of Justice as previously disclosed in April 2015, and as outlined in the Q4 FY16 earnings conference call on May 4, 2016.
102
Investing Today To Drive Long-Term Growth
A Portfolio Approach to Capital Deployment
FY16 Milestones1
$677M
$4+B
$1.5B
17%
$1.6B
in Internal
Investments
in Acquisitions
Announced
in Cash
Returned to
Shareholders via
Share Buybacks
Increase in
Quarterly
Dividend
in Long-term
Debt
Repayments
>$25 Billion2 Deployed During FY10 – FY16
1 As
2 As
reported in Q1-Q4 FY16 earnings press releases.
reported in our FY10 to FY16 Annual Reports as filed on Form 10-K.
103
FY17 Capital Deployment Priorities
Continuing Our Portfolio
Approach to Capital Deployment
•  Commit $700 to $800 million to internal
investment
•  Execute on FY16 announced acquisitions
•  Evaluate additional M&A opportunities
•  Assume WASO at 228M
•  Pay dividend
•  Maintain investment-grade rating; manage
debt capacity accordingly
104
Drivers Of FY17 Earnings Outlook
•  Furthering our global scale and sourcing capabilities
•  Continuing to grow our generics business and expand
customer relationships
•  Executing on acquisition synergies and capturing acquisition accretion
•  Driving organic growth across our diversified businesses in the U.S.,
Canada and Europe
•  Delivering growth and margin expansion from our payer, Relay Pharmacy,
imaging and revenue cycle management solutions
•  Providing additional value-added products and services across
both segments
•  Executing on the Cost Alignment Plan
•  Deploying capital consistent with our portfolio approach
105
Delivering Financial Performance
Updated FY17 Earnings Outlook of $13.43 to $13.931
Opportunities
Considerations
•  Favorable industry demographics
•  Branded and generic pricing trends
•  Procurement scale
•  Revenue mix
•  Expanding customer relationships
•  Nature of generic launches
•  Growth in specialty
•  Regulatory environment
•  Acquisition accretion and synergies
•  Reimbursement pressure
•  Execution on Cost Alignment Plan
•  Acquisition close timing
•  Capital deployment
•  WBA proposed acquisition of RAD
•  Operational excellence
•  Evolving market for hospital software
1 FY17
Outlook excludes anticipated charges of approximately $40 to $50 million, or 12 to15 cents per diluted share, related to the Cost Alignment Plan.
106
Delivering Better Financial Health
Operational
Excellence
•  Continued investments in supply-chain
automation
•  Global scale and best practices
•  On-boarding expanded customer
relationships
Driving
Innovation
•  Leading drug delivery channels and
manufacturer programs
•  Driving transformation to value-based care
•  Solutions for retail pharmacies
Expanding Scale and
Customer Solutions
and services
specialty commercialization
and growth
•  Private label solutions
Investing
for Growth
•  Portfolio approach to
capital deployment
•  Acquisition integration
•  Consistent internal reinvestment
107
Wrap-Up Q&A and Summary
108
We Expect $13.43 To $13.931 Per Diluted Share In FY17, Which
Excludes Approximately 12 To 15 Cents In Expected Charges From
Adjusted Earnings Related To The Cost Alignment Plan
The Fiscal 2017 outlook is based on the following key assumptions and is also subject to the Risk Factors outlined below:
• 
Distribution Solutions revenue growth is expected to increase by high single digits driven by market growth and acquisitions.
• 
We expect North America pharmaceutical distribution and services will deliver high single digit revenue growth in Fiscal 2017.
• 
International pharmaceutical distribution and services revenues are anticipated to grow low-double digits on a constant
currency basis in Fiscal 2017.
• 
Medical-Surgical distribution and services is expected to deliver mid-single digit revenue growth in Fiscal 2017.
• 
Fiscal 2017 branded drug price trends in the U.S. market are expected to be modestly below those experienced in Fiscal 2016.
• 
We expect a nominal contribution to our Fiscal 2017 results from generic pharmaceuticals that increase in price.
• 
We expect the profit contribution from the launch of new oral generic pharmaceuticals in the U.S. market will decrease
year-over-year.
• 
Technology Solutions revenues are expected to be down slightly year-over-year driven by anticipated revenue decline in our
hospital software business.
• 
Proceeds from anticipated antitrust litigation settlements are estimated at $140 million, pre-tax, for Fiscal 2017, compared to
$76 million, pre-tax, in Fiscal 2016.
• 
Fiscal 2017 pre-tax charges associated with our Cost Alignment Plan are expected to be between $40 million and $50 million
and are excluded from our Fiscal 2017 outlook of $13.43 to $13.93 per diluted share.
• 
The guidance range assumes a full-year adjusted tax rate of approximately 31.0%, which may vary from quarter to quarter.
1 Current
guidance range reflects adjustments related to the early adoption of a new accounting standard for share-based compensation and incremental
foreign currency exchange effects.
110
We Expect $13.43 To $13.931 Per Diluted Share In FY17, Which
Excludes Approximately 12 To 15 Cents In Expected Charges From
Adjusted Earnings Related To The Cost Alignment Plan (continued)
The Fiscal 2017 outlook is based on the following key assumptions and is also subject to the Risk Factors outlined below:
• 
Property acquisitions and capitalized software expenditures are expected to be between $700 million and $800 million.
• 
We assume that our ownership position in Celesio will be approximately 76% for Fiscal 2017.
• 
We expect the impact of foreign currency exchange rate movements will have a net unfavorable impact of approximately
3 cents per diluted share1 year-over-year as modest improvements in the Euro / USD average rate will be more than offset by
the GBP / Euro average rate when compared to the prior year.
• 
Weighted average diluted shares used in the calculation of earnings per share are expected to be approximately 228 million
for the year.
• 
Cash flow from operations is expected to increase approximately 15% year-over-year, excluding approximately $270 million in
cash payments expected in Fiscal 2017 related to the Cost Alignment Plan and a settlement agreement with the U.S. Drug
Enforcement Administration and the U.S. Department of Justice as disclosed in April 2015.
• 
Based on acquisitions announced as of March 31, 2016:
–  We expect amortization of acquisition-related intangible assets of approximately $1.36 per diluted share.
–  We expect acquisition expenses and related adjustments of 30 cents per diluted share.
–  We expect LIFO inventory-related charges of 48 cents per diluted share.
• 
The Fiscal 2017 guidance range does not include the impact of any potential new acquisitions or divestitures, impairment
or incremental material restructuring charges, or any potential claim or litigation reserve adjustments beyond those disclosed
in the Form 8-K as filed on March 18, 2016.
1 Current
guidance range reflects adjustments related to the early adoption of a new accounting standard for share-based compensation and incremental
foreign currency exchange effects.
111
McKESSON CORPORATION
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
FOR FISCAL 2016 - 2010
(unaudited)
(in millions, except per share amounts)
Gross profit
Operating expenses
Restructuring charges
Other income, net
Interest expense
Income from continuing operations before
income taxes
Income tax expense
Income from continuing operations after tax
Income from continuing operations, net of tax,
attributable to noncontrolling interests
attributable to McKesson Corporation
Diluted earnings per common share from
continuing operations, net of tax, attributable to
(a)
McKesson Corporation
Diluted weighted average common shares
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Income tax expense
McKesson Corporation (a)
(a) 
(b) 
As Reported
(GAAP)
Amortization
of AcquisitionRelated
Intangibles
$
$
11,416
(7,668)
(203)
58
(353)
3,250
(908)
2,342
7
423
1
-
Year Ended March 31, 2016
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
431
(136)
295
(52)
-
110
4
-
$
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
244
-
114
(36)
78
-
244
(95)
149
-
-
-
11,667
(7,135)
(203)
63
(353)
4,039
(1,175)
2,864
(52)
$
2,290
$
295
$
78
$
-
$
149
$
2,812
$
9.84
233
$
1.27
233
$
0.34
233
$
-
$
0.63
233
$
12.08
233
As Reported
(GAAP)
Amortization
Intangibles
$
$
11,411
(8,443)
63
(374)
2,657
(815)
1,842
9
483
2
-
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
494
(157)
337
(67)
-
1
223
-
$
150
-
224
(78)
146
150
150
-
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
337
337
(131)
206
(b)
11,758
(7,587)
65
(374)
3,862
(1,181)
2,681
-
(67)
$
1,775
$
337
$
146
$
150
$
206
$
2,614
$
7.54
235
$
1.43
235
$
0.63
235
$
0.64
235
$
0.87
235
$
11.11
235
Certain computations may reflect rounding adjustments
Adjusted Earnings per share on a Constant Currency basis for FY16 was $12.21 per diluted share, which excludes the foreign currency exchange effect of $0.13 per diluted
share.
113
(unaudited)
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Income tax expense
As Reported
(GAAP)
Amortization
Intangibles
$
$
2,171
(757)
1,414
(a)  Certain computations may reflect rounding adjustments.
11
308
-
$
3
155
14
46
319
(115)
204
218
(69)
149
(7)
(2)
5
$
68
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
68
(15)
53
311
311
(121)
190
-
8,677
(5,382)
46
(254)
3,087
(1,077)
2,010
-
(4)
$
1,419
$
197
$
147
$
53
$
190
$
2,006
$
6.08
233
$
0.85
233
$
0.63
233
$
0.23
233
$
0.81
233
$
8.60
233
Gross profit
Operating expenses
Other income, net
Impairment of equity investment
Interest expense
income taxes
Income tax expense
8,352
(5,913)
32
(300)
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
As Reported
(GAAP)
Amortization
Intangibles
$
$
6,881
(4,534)
34
(191)
(240)
1,950
(587)
1,363
13
196
-
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
(10)
11
209
(76)
133
-
$
1
(6)
(5)
-
72
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
72
(27)
45
-
13
13
(5)
8
-
6,907
(4,276)
34
(191)
(229)
2,245
(701)
1,544
-
-
$
1,363
$
133
$
(5)
$
45
$
8
$
1,544
$
5.69
239
$
0.56
239
$
(0.02)
239
$
0.19
239
$
0.03
239
$
6.45
239
114
(unaudited)
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Income tax expense
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Income tax expense
(a) Certain computations may reflect rounding adjustments.
As Reported
(GAAP)
Amortization
Intangibles
$
$
6,435
(4,289)
20
(251)
1,915
(521)
1,394
-
17
167
-
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
26
-
$
149
-
184
(71)
113
26
(10)
16
149
(89)
60
-
-
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
11
11
(4)
7
6,463
(3,947)
20
(251)
2,285
(695)
1,590
-
-
$
1,394
$
113
$
16
$
60
$
7
$
1,590
$
5.56
251
$
0.45
251
$
0.07
251
$
0.24
251
$
0.03
251
$
6.35
251
As Reported
(GAAP)
Amortization
Intangibles
$
$
5,828
(4,041)
35
(222)
1,600
(503)
1,097
-
16
115
-
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
43
(16)
25
$
213
-
131
(51)
80
52
(16)
36
213
(64)
149
-
-
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
3
3
(1)
2
5,847
(3,670)
19
(197)
1,999
(635)
1,364
-
-
$
1,097
$
80
$
36
$
149
$
2
$
1,364
$
4.17
263
$
0.30
263
$
0.14
263
$
0.57
263
$
0.01
263
$
5.19
263
115
(unaudited)
Gross profit
Operating expenses
Other income, net
Interest expense
income taxes
Income tax expense
(a) Certain computations may reflect rounding adjustments.
As Reported
(GAAP)
Amortization
Intangibles
$
$
5,527
(3,558)
43
(187)
1,825
(605)
1,220
-
21
97
Acquisition
Claim and
Expenses and
Litigation
Related
Reserve
Adjustments
Adjustments
$
-
-
$
(20)
-
118
(46)
72
-
(20)
8
(12)
-
-
-
LIFO-Related
Adjustments
Adjusted
Earnings
(Non-GAAP)
$
$
8
8
(3)
5
5,556
(3,481)
43
(187)
1,931
(646)
1,285
-
-
$
1,220
$
72
$
-
$
(12)
$
5
$
1,285
$
4.46
273
$
0.26
273
$
-
$
(0.04)
273
$
0.02
273
$
4.70
273
116
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
FOR FISCAL 2016 - 20010
(unaudited)
(in millions)
As Reported (GAAP):
Revenues
Distribution
Solutions
Technology
Solutions
Corporate
$ 187,999
$
$
interest expense and income taxes
Pre-Tax Adjustments:
Amortization of acquisition-related intangibles
Acquisition expenses and related adjustments
Claim and litigation reserve adjustments
LIFO-related adjustments
Total pre-tax adjustments
Adjusted Earnings (Non-GAAP):
Revenues
3,553
$
$
391
112
244
747
2,885
519
$
40
Total
Technology
Solutions
Corporate
$ 190,884
$ 175,976
$
$
3,603
3,047
(469)
$
-
-
$
40
$
$ 187,999
$
2,885
$
$
$
559
$
2
-
(467)
48
$
$ 190,884
$ 175,976
$
3,069
$
$
$
$
486
$
$
4,191
Distribution
Solutions
Technology
Solutions
Corporate
As Reported (GAAP):
Revenues
$ 119,424
$
3,029
$
$
2,219
$
360
$
$
121
24
149
11
305
$
63
1
$
$
64
$
Adjusted Earnings (Non-GAAP):
Revenues
$ 119,424
$
3,029
$
$
$
424
$
Pre-Tax Adjustments:
Amortization of acquisition-related intangibles
Acquisition expenses and related adjustments
Claim and litigation reserve adjustments
LIFO-related adjustments
Total pre-tax adjustments
$
2,524
-
(413)
-
-
(412)
Total
Technology
Solutions
Corporate
$ 179,045
$ 134,062
$
$
3,031
2,472
1
12
$
13
-
(441)
80
$
$ 179,045
$ 134,062
$
3,330
$
$
$
$
528
$
$
3,227
Total
Corporate
$ 122,453
$ 108,889
$
2,915
$
$
2,166
$
1,897
$
266
$
$
184
26
149
11
370
$
70
41
213
3
327
$
61
$
$
61
$ 122,453
$ 108,889
$
$
$
$
$
2,536
$
2,224
62
18
-
$
$
-
1
34
35
-
(414)
Total
Corporate
$ 111,804
$ 105,578
$
2,847
$
(341)
$
1,822
$
1,988
$
346
$
$
131
27
213
3
374
$
51
$
67
$
$
(14)
(14)
2,915
$
-
327
$
(355)
Total
Distribution
Solutions
Technology
Solutions
Corporate
137,392
$ 119,046
$
$
2,471
2,195
$
319
172
68
311
870
$
137,392
$
3,341
$
3,150
330
$
$
$
67
$ 119,046
$
$
$
2,475
Total
$
(335)
60
7
$
148
47
72
13
280
-
122,196
2,190
$
$
1
(64)
(63)
3,150
$
-
$
122,196
397
$
$
2,474
-
(398)
$
209
(10)
72
13
284
Technology
Solutions
-
$
-
Distribution
Solutions
-
(449)
$
4,236
$
448
$
$
494
224
150
337
1,205
3,330
256
120
68
311
755
-
Technology
Solutions
1
$
-
Distribution
Solutions
1
-
48
-
Distribution
Solutions
(454)
$
4,392
$
438
$
$
431
114
244
789
3,069
445
212
150
337
1,144
2
-
$
4,300
-
Distribution
Solutions
-
108,425
(322)
$
2,012
$
$
108,425
$
2,118
8
59
$
67
$
(20)
(20)
$ 111,804
$ 105,578
$
2,847
$
-
$
$
$
413
$
$
2,196
$
2,047
-
Total
$
(342)
$
118
(20)
8
106
117
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
REVENUES, OPERATING PROFIT AND OPERATING PROFIT MARGIN BY SEGMENT
FOR FISCAL 2016
(unaudited)
As Reported
(GAAP)
Adjusted
Earnings
(Non-GAAP)
Cost Alignment
(a)
Plan Charges
Sale of
Businesses
Baseline
(b)
(Non-GAAP)
REVENUES
Revenues
FOREIGN CURRENCY EFFECTS
Foreign currency effects
REVENUES IN CONSTANT CURRENCY
Revenues in constant currency
$
$
$
$
$
$
187,999
2,885
190,884
$
4,402
11
4,413
$
192,401
2,896
195,297
$
3,553
519
4,072
$
$
$
$
187,999
2,885
190,884
$
-
$
4,402
11
4,413
$
-
$
192,401
2,896
195,297
$
-
$
4,300
559
4,859
$
161
51
212
$
2
$
$
2
$
$
163
51
214
$
$
$
$
$
$
$
-
$
-
$
-
$
$
$
$
187,999
2,885
190,884
4,402
11
4,413
192,401
2,896
195,297
OPERATING PROFIT
Operating profit
FOREIGN CURRENCY EFFECTS
Foreign currency effects
$
$
$
$
OPERATING PROFIT IN CONSTANT CURRENCY
$
Operating profit in constant currency
$
56
(17)
39
3,609
502
4,111
$
$
$
$
$
85
(17)
68
4,385
542
4,927
$
$
$
-
$
$
(52)
(51)
(103)
-
(52)
(51)
(103)
$
$
$
$
$
$
4,409
559
4,968
87
(17)
70
4,496
542
5,038
STATISTICS
(a) 
(b) 
Operating profit as a % of revenues
1.89%
17.99%
2.29%
19.38%
2.35%
19.38%
Operating profit as a % of revenues (Constant Currency)
1.88%
17.33%
2.28%
18.72%
2.34%
18.72%
During the fourth quarter of FY16, the Company approved a restructuring plan to reduce its operating expenses ("Cost Alignment Plan") and recorded pre-tax charges of $161
million and $51 million within our Distribution Solutions segment and Technology Solutions segment in the GAAP operating results.
Baseline (Non-GAAP) for FY16 excludes from Adjusted Earnings (Non-GAAP) charges relates to the Cost Alignment Plan and gains on the sale of two businesses recorded in
FY16.
118

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